Current Attempt in Progress
- Current Attempt in Progress
The GoldenValley Company’s copy department, which does almost all of the photocopying for the sales department and the administrative department, budgets the following costs for the year, based on the expected activity of 4,200,000 copies:
| Salaries (fixed) | $84,000 | ||
| Employee benefits (fixed) | 10,500 | ||
| Depreciation of copy machines (fixed) | 8,400 | ||
| Utilities (fixed) | 4,200 | ||
| Paper (variable, one cent per copy) | 42,000 | ||
| Toner (variable, one cent per copy) | 42,000 |
The costs are assigned to two cost pools, one for fixed and one for variable costs. The costs are then assigned to the sales department and the administrative department. Fixed costs are assigned on a lump-sum basis, 40 percent to sales and 60 percent to administration. The variable costs are assigned at a rate of 2 cents per copy.
Assuming 4,020,000 copies were made during the year, 2,100,000 for sales and 1,920,000 for administration, calculate the copy department costs allocated to sales and administration.
| Costs allocated to sales | enter a dollar amount | ||
| Costs allocated to administration | enter a dollar amount |
2. Current Attempt in Progress
Richetti Metal Works received an offer from a big-box retail company to purchase 2,880 metal outdoor tables for $208 each. Richetti Metal Works accountants determine that the following costs apply to the tables:
| Direct material | $124 | |||
| Direct labor | 48 | |||
| Manufacturing overhead | 67 | |||
| Total | $239 |
Of the $67 of overhead, $13 is variable and $54 relates to fixed costs. The $54 of fixed overhead is allocated as $1.06 per direct labor dollar.
(a) What will be the real effect on profit if the order is accepted?
| The profit will select an option |
3. Current Attempt in Progress
The following are six cost pools established for a company using activity-based costing. The pools are related to the company’s products using cost drivers.
For each of the preceding cost pools, identify a possible cost driver. (Each answer is used only once, select the best answer for each cost pool.)
| COST POOLS | COST DRIVER | ||||
| 1. | Inspection of raw materials | select an option for Inspection of raw materials | |||
| 2. | Production equipment repairs and maintenance | select an option for Production equipment repairs and maintenance | |||
| 3. | Raw materials storage | select an option for Raw materials storage | |||
| 4. | Plant heat, light, water, and power | select an option for Plant heat, light, water, and power | |||
| 5. | Finished product quality control | select an option for Finished product quality control | |||
| 6. | Production line setups | select an option for Production line setups |
4. A cost pool is
not necessary in cost-plus contracts.
useful when separating mixed costs into their fixed and variable components.
allocated using a single allocation base.
a method of allocating costs among service departments.
5. Which of the following is a measure of activity used to distribute indirect costs?
Cost objective
Cost pool
Cost driver
Cost unitization
6. What costs are affected by the manager’s decisions for which the manager should be held accountable?
Indirect costs
Controllable costs
Sunk costs
Pooled costs